6.34% Rate for 10 year fixed

ritesh

To be honest a fixed rate of 6.34% is very high indeed. Questions you will want to have answered are "What is the true cost analysis of this product each month?"

It is worth checking out Market Harborough (I believe it is a small building society). They have a fixed rate of 5.35% for 3 years.

This is certainly the best I have seen

Tim_L

It's well worth considering that even if you have to pay higher up-front fees to secure a lower remortgage rate, the saving on the rate will often easily compensate for this. You can always borrow the £1000 (say) via a 0% credit card deal if it's an immediate problem raising the money.

Another thing which everyone doing a remortgage should know is that by default, lenders often roll the fees onto the mortgage - this is seductive as you don't have to pay the fee immediately, but a massively false economy because if you are paying interest on the fees for 10 years it will add up to a much larger sum. It's a very sneaky trick indeed.

I think the rate quoted in the question is very high indeed, and even with rates going up would look for a better deal, even if this is for a shorter term period. It's very tempting to go for long term stability for budgeting, but there is a hell of a lot that can happen in 10 years that this won't help with. In fact almost by definition the things that cause a problem tend to be things you haven't anticipated at all.

Basically your salary will tend to increase if you stay in work, so you can probably cope with interest rate increases on such a relatively small mortgage (a fiver a month for every 0.25% hike), but if you lose your job you're stuffed anyway, and in the meantime will have paid well over the odds for the fixed rate. The best way of dealing with this sort of situation - in my view at least - is to take a low rate over 3-5 years and try to overpay to the maximum you can afford (or save a regular amount into ISAs and high interest regular savers accounts so you can reduce the capital the next time you remortgage - in effect a do it yourself offset mortgage). This will compensate for even quite hefty interest rate rises.

My own view is that although I think we are in for a couple of years of small rate rises, there is so much underlying weakness in the UK and US economies that rates will probably be forced down again to try and stimulate growth. Although there are massive inflationary pressures from the oil price spiral and housing boom, there's really not much possibility for companies in the private sector to raise prices because of the competition from the Far East in particular. So wage inflation will stay low, and in fact oil prices may just act as brake on consumption. Indeed most of the growth in the UK economy seems to be coming from increases in the public sector, which I doubt can be allowed to last - there is talk of my council tax more or less doubling as a result of the rebanding exercise, and I doubt many people will put up with that if they are receiving less than inflation payrises.